Introduction to shipping goods from China: We get questions daily about how shipping works from mainland China and neighbor Hong Kong and what to consider before, during and after the products have been packaged by the manufacturer and waiting to be sent overseas. The majority of small companies importing from China perceive that the process of sea freight is complicated to manage, requiring huge volume, long estimated delivery times and having hidden cost. The same companies prefer sending smaller packages more often by Air express with recognized cargo shipping brands such as DHL, Fedex and UPS due convenience and delivery time – even if the cost is high(er).
In fact, there is some truth to the above. If not careful, one can easily make mistakes whatever the delivery method. But there is no final solution to logistics as many think. All delivery methods should be considered depending on the competition, total volume, delivery time, price and customs. We find it uneffective though for a successful business to devour it’s focus and workforce from it’s core business, producing and selling products, to also trying to manage the logistics jungle on a daily basis. Far East Rising is, on the other hand, using all the market information and connections to filter the right delivery method for every unique client and product. It happends that we introduce and combine the goods of our clients if they are sharing the same market to further lower the sourcing cost, packaging cost, shipping cost with higher volume.
Air express (usually DHL) is suitable for packages less than 200 kilograms or 440 pounds with a delivery time of 48 hours world-wide after the goods are picked up.
Air Freight is a cheaper option to the Express for packages over 300 kilograms or 600 pounds with a delivery time of 5 – 7 days world-wide after the goods are delivered to the cargo terminal. Importer is responsible for all the import documentation and managing transportation from the airport to the warehouse in the destination country.
LOW CONTAINER LOAD (LCL)
LCL delivery method is aimed at importers whose goods do not fill up most of a 20’‘ or 40’’ container. In this situation, the container is loaded and paid by multiple recipients who share the same harbor port of the final destination. A perfect solution for a medium sized business searching for a balance between bigger volume and lower shipping cost.
FULL CONTAINER LOAD (FCL)
FCL is the cheapest (and best) alternative out there if a importer has goods to fill at least 70% of the total container volume. This option gives the importer full control over the goods and packaging. One also avoids issues or damage to the goods from contact with other unknown packages sharing same delivery method.
An incoterm is an universal and international code used to determine if, where and how responsibility for shipment is divided between supplier and importer. It is necessary to understand incoterm when negotiating with supplier to be able to calculate the final cost of goods with inclusion of fees such as: harbor fees, transportation fees and other “hidden fees”.
- EXW (EXWORKS)
EXW quoted price is the factory’s price of the goods – no shipping is included, buyer covers all the cost. The buyer has to, firstly, arrange transport of the goods from the factory to the harbor port and then arrange the transport from the harbor port in China to the final destination. Only valid if importer has his own team with logistics set up. More often than not, the supplier is more experienced with transporting their own goods from the factory to the harbor port than anybody else.
- FOB (Free On Board)
FOB quoted price includes transport of the goods from factory to the harbor port with approved documents and fees for export clearence. FOB requires the importer to arrange freight with a forwarding company from China to the final destination. FOB is a good and cheap(er) alternative if the importer has a reliable freight forwarder company – something we at the Far East Rising can help with.
- CIF (Cost Insurance Freight)
CIF quoted price includes all transport arragements and fees from factory or supplier to the nearest harbor port of the final destination. CIF does not include transport costs and administrative fees such as unloading, customs clearance, harbor fees, customs and VAT in the country of destination. CIF is usually very affordable on paper but has a high total cost when including the external fees added on from the destination harbor port.
- DAP / DDP (Delivered at Place)
DAP quoted price includes all transport arragements and fees from factory or supplier to a specific delivery address at the final destination; for example, the buyers warehouse. Customs and import taxes falls on the importer and are not included in the price. DAP is most suitable for inexperienced importers who want to know the total cost of the good with all the fees included from the start. This is an all-inclusive package that we at Far East Rising can provide.